WHEN THE OFT announced its study into home buying and selling, many people in property believed that the results of the study would lead to the regulation and licensing of all estate agents.
However, in the OFT’s newly published report, although it found that the housing market ‘remains dominated by traditional estate agents with weak competition between them on price’, the OFT is not recommending that Government introduces any further regulation.
This unexpected light touch has met with mixed reactions. Chief Executive of the NAEA, Peter Bolton King said:“Once again the OFT has categorically failed to see that better regulation of the home buying and selling market is required. Buying a home is often the largest single transaction of a person’s life and it is disappointing that the OFT has not thought it appropriate to acknowledge that a robust and appropriate level of consumer protection is needed”.
One PROPERTYdrum reader (at least) was very pleased; Richard Barber, partner in house sales at W A Ellis estate agents in Knightsbridge, London, said:
"The OFT report confirmed that 88 per cent of people are happy with the service provided by estate agents. Those of us who are proud of the professional service we provide and the expertise that we have gained over many years working in the property market, will be warmed by this result and not surprised.
And The Property Ombudsman, Christopher Hamer supported the decision against legislation, saying that the industry could and should work together:“A formal regulatory regime would have potentially significant costs for the industry – those costs end up with the consumer and perhaps inevitably would lead to higher charges which are already often a source of dissatisfaction with those who feel that agents do not offer an acceptable service.
"Many agents I have spoken to appear to be enthusiastic about some form of licensing. Such a regime can only be seen as a good thing giving sellers and buyers confidence that the person they are dealing with is properly trained and licensed by a competent authority. Again that does not have to involve government intervention – the industry can build on what currently exists within initiatives being pursued by the National Federation of Property Professionals and the steering group for the proposed Register of Property Agents. "I recognise that the current political environment means there is unlikely to be any wholesale change to legislation relating to home buying and selling”.
That was the good news.The OFT report went on to say, “A shake-up in how homes are sold, including updating legislation to allow new entrants into the market, could lead to a better deal for house buyers and sellers The OFT believes that innovation, in particular through online services, could have a dramatic impact on the cost of buying and selling a home”.
John Fingleton, OFT Chief Executive, said, “In the present economic climate it is more important than ever that people get a good deal when buying or selling a home. Encouraging new business models, online estate agents and private seller platforms could put useful competitive pressure on traditional models and lead to better value for buyers and sellers. The Government can help this process by updating legislation and making sure regulation only applies where it is essential to protect consumers. We also encourage home sellers to negotiate hard on commission fees and consider using alternatives to traditional estate agents.
”Translated, that means that door to FSBO – For Sale By Owner - will be opened wide to all, bringing a potential surge in online agencies and direct sales platforms.
Richard Barber, W A Ellis said, “The more worrying element of the report is that it encourages internet based agencies, WITHOUT legislation. This means that people will be placing the sale of their most valuable asset into the hands of inexperienced people, which are effectively no more than networking sites, and will add no value to their home. Experienced, professional estate agents, who are well-established in the area in which the property is being sold bring more to the sale of a property than merely a valuation. They will seek out the right buyer, quality them and advise on the best presentation of the property."These un-policed property websites are the DIY element of our market, and we all know what happens when we decide not to use a professional to do the job we need, and try to do it ourselves...! Thank goodness 88 per cent of the population value the services of estate agents!"
Rightmove, a source of much frustration with agents, already permits online agencies to advertise homes on its portal, but still maintains that the agent is the best bet.
Commercial Director Miles Shipside said, “The internet has changed the way people search for property dramatically. Now the majority of people like to do their research on sites like Rightmove not only to find properties but to see which estate agents are selling properties like theirs. However having done that research, the local knowledge and expertise that an estate agent can provide is still very important.”
On the report’s comment that very few websites in the UK allow for private sellers, Shipside went on, “Our own research into consumer behaviour shows they value the role of a local agent very highly, perhaps explaining why the number of private sales is low in the UK compared the other countries.”